SHANGHAI/HONG KONG- As Chinese authorities signal that a two-year crackdown on the domestic technology sector is over, global investors are relieved and yet loath to take the government at its word.
Foreign investors have been returning to mainland markets since May as its stringent COVID-19 lockdowns ease and after pledges from China’s highest policymakers, including Vice Premier Liu He, to support an economy staring at recession.
More explicit signs that the regulatory crackdown that crippled the technology sector is easing came this week with reports ride-hailing firm Didi Global and billionaire Jack Ma’s Ant Group, the fintech affiliate of conglomerate Alibaba, are getting out of the regulatory doghouse.
Yet, the lure of a battered and cheap market and the prospect of domestic economic stimulus have not won investors over completely.
“I do not think that the crackdown is behind us for good as the Chinese will do what they need to when they feel like it. Unfortunately, I think it’s that simple,” said Jimmy Lee, chief executive officer of The Wealth Consulting Group, a wealth management firm.
Lee expects US-listed shares of Chinese firms to remain volatile, but says “for now I think that the government wants to revive its economy and is giving investors reasons to be optimistic.”
In some respects, Thursday’s news that China’s central leadership had given Ant Group a tentative green light to revive its initial public offering (IPO) brings to a close a crackdown that began with the stalling of that IPO in November 2020. A Shanghai-based fund manager, who declined to be identified, said an Ant IPO or a completion of its restructuring, would send a very positive signal to the market. But he cautions that Ant is not technically ready for an IPO as it has not yet obtained necessary licenses for its revamped business, and that “even if it’s listed, Ant has become a very different animal”. – Reuters
